New procedures that would limit Virginia utility rate increases to no more than the increase in the cost-of-living index were announced in Richmond yesterday, but some utility critics complained the change might end up costing customers more.
Critics also said the new plan -- the details of which remain to be worked out by authorities -- also could limit the extent to which the public could fight the utilities in public hearings on possible rate increases.
State Corporation Commissioner Junie L. Bradshaw and House Majority Leader A. L. Philpott (D-Henry) announced that instead of having periodic large rate increase requests -- such as Virginia Electric and Power Co.'s pending request for a $246 million, 25 percent increase -- major utilities will be reviewed annually. They will be quickly granted increases, if warranted, of up to, but no more than, the national cost-of-living index, the officials said.
If the plan is carried out as announced, it may be the first time a state regulatory agency has broken in any significant way from the traditional pattern of utility rate decision making.
A commission spokesman said the plan aims "to further President Carter's program of containing inflation," although it has not been submitted to the White House for review.
"Under this plan, consumers would know that their utility rates will go up no faster than the cost of living," Philpott said.
Bradshaw said, "We're trying to avoid these abrupt, sudden increases.... The bottem line is to keep the utilities viable at the lowest possible cost to the consumer." Bradshaw on Feb. 1 will become chairman of the threemember commission, which regulates utilities in Virginia.
The new plan will have no effect on the outcome of the pending Vepco rate request, a commission spokesman said.
State Sen. Clive DuVal (D-Fairfax), one of the leaders in the fight against the Vepco rate increase, said yesterday that, "It looks to me that having a huge rate case and fighting over it for two or three years may be better for the consumer.
"If you just nibble away at him and give the utilities 7 or 8 percent annually in a badly publicized hearing [with limited public participation] then I think it would be undesirable from the consumer viewpoint."
DuVal said that if the commission "routinely grants increases up to the cost of living each year, [the increases] would be more than before...."
Vepco senior vice president William W. Berry said yesterday Vepco is "a little skeptical" of the change.
"If there is a way to speed up the rate-making process and avoid large requests like that now before the commission it would benefit our customers," Berry said.
It was not clear yesterday when the plan will go into effect. The commission spokesman said letters will go out to utility companies during the next few weeks explaining the details of the plan,
The yet-to-be disclosed details of the new plan are all-important. A commission spokesman acknowledged yesterday, for example, that if the fuel rate charged to customers is considered in separate hearings from the new annual review hearings, then the overall increase to customers in a given year migt exceed the cost of living increase.
Vepco's Berry said that, "since 1972, our rates, not counting fuel costs, have not risen as fast as inflation. Fuel costs, however, have risen at a far more dramatic rate than has inflation. Any new procedures which limit increases to the cost of living must recognize this."
While the consumer price index rose 44.9 percent from 1972 to 1977, according to a Vepco spokesman, the average cost of a kilowatt hour to a Vepco customer rose 102 percent. During the same period the cost of fuel the coal, oil and uranium that burns in the company's generating plants -- rose 405 percent.
As of Jan. 1 this year, the fuel cost ceased to be listed as a separate item on customer bills in Virginia. It is now included in the basic rate, and subject to commission scrutiny on a quarterly basis.
The commission decided to handle fuel costs this way to eliminate the controversial "automatic pass-through" feature of fuel costs. Exactly how they will be handled under the new plan is not yet clear.
If legislation is necessary to implement the new plan it will be introduced, officials said. The Democratic Caucus of the House of Delegates in Richmond yesterday officially adopted a policy statement endorsing an annual review of utilities and limiting their rate increases to the cost of living.